In this week’s LeapRate Guest Editorial, Dr Neale Starke elaborates on the rationale behind his MT4-compatible software.
I have always been fascinated by the markets and trading; even in medical school I seriously considered leaving university to pursue a career in the markets. Much later, in 1996 when I was already working as a specialist physician, the lure was still there so I decided to relook at it and I attended a course in trading indices. This was the era of trading by hand-drawing charts as the internet was still relatively new so it was difficult to trade and work a solid day as well.
And there were times when it had to take a back seat because of the other competing time pressures. But my interest was piqued and when FOREX trading became more accessible, I revisited it, excited by the new technology that meant I no longer had to manually draw charts and ease of opening an account.
Over the next few years I worked hard to develop my skills, using demo accounts to test ideas and live accounts to trade. I attended a number of courses, including travelling overseas for private seminars with some well-known traders from a variety of backgrounds including one on trading psychology. I was slowly building confidence and my profits. I retired as a doctor and became a full-time trader in 2011.
As a less experienced trader, there are many challenges to face. The main one I faced was the need to be ‘right’ all the time, which resulted in a tendency to micro-manage trades, usually to their detriment. This then had a follow-on-effect of being unable to really manage more than a couple of trades at the same time and of course, since I had ‘given up my day job’, was a significant impediment to being really successful.
This was the start of my search for some tools to help me avoid the need to micro-manage trades and trade managers seemed like the best way to go. At that time, there were a few on the market, but they did not seem to work well. They took too much control, and once the program had the trade there was little you could do to intervene; and they were so rigid with little or no ability to intervene and vary their behaviour.
I decided that it would be better to create something that fitted my requirements rather than try to fit in with someone else’s system, and so STIG Trader was born. But the program kept evolving, mostly out of a desire to make it more versatile so it can be used in a wide variety of situations. I found that my trading improved in a variety of ways. Manual trading became easier because STIG Trader allowed me to focus on correct entries rather than getting tangled in calculations for stop loss, take profit and trade size. Once a trade was running, I no longer had to watch every tic on the chart to make sure it was still running well.
The advent of loss compensation also allowed me to forget about being ‘right’ all the time, and trust the mathematics. All of a sudden I was able to take many more trades than I had before and I could trust that the software would manage the trade the way I wanted it to be. As a result, I became more successful. I continued to develop the functionality of STIG Trader and gave it to a number of traders I knew to try and improve their trading, which it did. They particularly liked that they could:
Manage multiple positions with scaling in or pyramid entries.
Scale out a trade so that it becomes risk-free early in the trade.
Advance the take-profit forward any distance.
Automatically slow the trailing stop once it has reached a break-even position.
Recover losses with loss recovery function.
The next step in the evolution involved developing tools that could generate entry signals that I could plan ahead of time, and STIG Trader would then manage them – so I created the capacity to trigger entries from trend lines, CCI oscillators and Fibonacci retracement tools.
The final step was to create functionality allowing indicators to generate entry signals and STIG Trader would then take over control of the trade. When using a signal generator STIG Trader functions as an automatic trader or robot, but with one important difference. The indicator triggers the trader, and STIG Trader manages it.
This means that the ability to monitor trades and alter STIG Trader’s behaviour during the trade is open to the trader, including adding other trades. Any trader can develop his or her own bespoke indicators that will generate the necessary signals to work with STIG Trader.
Now I trade more than 50 charts at one time, using both manual and automated entry systems and STIG Trader managing all the trades. As a result my role as a trader has changed from a screen-focused trader looking at every nuance of market change, to a supervisor looking at the bigger picture of the market, the various trade processes and the account. It is like having my own trading team.
I was encouraged to commercialize the program, so in March this year launched it into the market for any MT4 trader. Since the software is available for a one-off fee, the cost is quickly recuperated through greater profitability. Since its launch I am have been really pleased by the market reaction and the feedback from users who have written to me about their experience, reporting that they have already noticed improvements in their performance.
Even with all that functionality however, I believe there is more to becoming a good trader than just having the best tools. I have been asked many times about what it takes to become an expert trader, especially when transferring from a different career background. In my view it is that is exactly the same as becoming an expert in any other activity you are serious about. It involves gaining knowledge, thoughtful practice and skill-focused exercises to develop specific skills so they become ‘automatic’, and investing time. Psychologists have long argued that it takes about 10,000 hours of experience or exposure to these areas before an individual has enough ‘automatic function’ to allow them to focus on the finer points of their activity. This applies to almost every endeavor including professional sports, performing arts, academia, all the professions and trades.
How long is 10,000 hours? Five years of full time work – which is a world away from those advertisements that tell you that you can do a course and become an expert trader in a few short weeks.
In trading, practicing skills is not something that most people emphasise and many specialist Forex educators do not focus on developing skills through focused rehearsal and practice.
To my mind, simulators play an important part of the learning process for traders. It is the only place you can safely practice in the same way that a golfer goes to the driving range or practice fairway, the tennis player hits thousands of balls in an afternoon to practice a particular stroke, a musician practices scales and exercises and so on.
Image if someone wanted to be a professional golfer but decided they would just do all their practice on the golf course while they were playing games or even tournaments. It is would not go well.
STIG Trader was built as a trading tool but an additional benefit is that it operates within MT4’s strategy tester enabling you to take manual trades in the simulator. In this way traders can practice skills, and focus specific elements of their trade behaviour. This is thoughtful rehearsal and is so important in the journey to becoming an expert. As a full-time professional trader I still use it regularly, and go through a series of skill-focused exercises to warm up before I trade, just like a professional golfer or tennis player would hit balls before the tournament, the singer would practice scales to warm up and so on.
Trading full-time is a challenging yet rewarding profession, and if there are 2 things that can help make it a successful career I believe these are good technology that does what you need it to do, and the ability to practice to test and perfect your skills. If both are available in one package, then what’s not to like?